Current: Federal Government to Spend 8.5% of all IT Spending on Cloud in FY 2016, According to IDC Government Insights

10 Feb 2016

Federal Government to Spend 8.5% of all IT Spending on Cloud in FY 2016, According to IDC Government Insights

Lower price points for cloud services and the changing nature of cloud are helping to drive federal cloud consumption

FRAMINGHAM, Mass., February 10, 2016 – Cloud spending represents about 8.5% of all IT spending by the federal government for fiscal year 2016 (FY16), according to a new report from IDC Government Insights. That represents a significant increase from the roughly 5% dedicated to cloud in FY15. In a new report, Federal Cloud Growth Is Substantial Through 2019, But Provider Landscape Is in Flux (Doc #US40982016), author Shawn P. McCarthy examines the impact of ongoing efforts by the U.S. Federal CIO Council and the Office of Management and Budget (OMB) to get government agencies to move some types of IT systems to the cloud — particularly new systems, stored data, and mobile solutions — as the use of cloud-based solutions continues to grow in the U.S. federal government. Read more about this new report in Shawn's latest blog post: HERE

ClicktoTweet : Within the 2016 FY, the fed gov will use 8.5% of all IT spending on Cloud, says IDC Government Insights

According to the new report, federal cloud spending for FY15 actually came in at more than double what OMB originally predicted when the FY15 budget was originally released. This increase likely was accelerated because of the cost savings that some agencies achieved by moving toward hosted solutions. As in the previous two years, OMB has predicted only a slight increase in cloud spending for FY16. The current estimate is just over $6.7 billion for FY16. The increased level of spending on cloud solutions indicates that OMB's pressure on agencies to move to standardized cloud-based solutions is having a significant long-term effect.

The report goes on to note that while total cloud spending is going up, the nature of cloud spending itself is changing. For example, the way that the government labels its cloud categories is shifting. Last year, infrastructure as a service (IaaS) was the largest spending category, followed by software as a service (SaaS). However, this year, the federal government added a new cloud category simply titled "Other." This other category immediately became the top bucket for cloud spending. This reflects the fragmented nature of cloud solutions, in that there are some types of calls to cloud-based databases, application programming interfaces (APIs), and shared services that don't fit easily into the current cloud categories. The spending breaks out under the new categories as follows:

SaaS saw a slight increase from $700.7 million in FY15 to $702.9 million

IaaS saw a slight increase from about $1.1 billion to nearly $1.2 billion

Platform as a service (PaaS) rose from $227.1 million to $231.3 million

Other cloud spending was not mentioned last year. Now the federal government says it spent $4.6 billion on that category in FY15 and will spend about $45.2 million more than this for FY16

"Clearly, lower price points for cloud services and the changing nature of cloud are helping to drive federal cloud consumption into new directions, resulting is substantial growth in some consumption patterns," said McCarthy. "We believe that cloud spending will eventually grow to about 50% of all government IT spending, but that number will not be reached until 2018."

As for compatibility, processes such as FedRAMP continue to help vendors make their cloud-based solutions available to federal agencies. In addition, expectations for self-service on the part of both citizens and younger government employees will drive new cloud investments because this can (potentially) be a shortcut to offering real-time solutions and instant provisioning. Vendors that can promise such capabilities while also meeting FIPS, FISMA, and other FedRAMP standards will find a ready market within the government for high-quality solutions.

IDC Government Insights assists government policy, program, and IT leaders, as well as the suppliers who serve them, in making more effective technology decisions by providing accurate, timely, and insightful fact-based research and consulting services. Staffed by senior analysts with decades of government and IT industry experience, our global research analyzes and advises on business and technology issues facing the Federal/Central and local/provincial Governments. International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology market. IDC is a subsidiary of IDG, the world’s leading technology, media, research, and events company. For more information, please visit www.idc-gi.com, email info@idc-gi.com, or call 703-485-8300. Visit the IDC Government Insights Community at http://idc-community.com/government.